Ctrip Makes A Huge $200 Million Investment Into LY.COM

Ctrip Makes A Huge $200 Million Investment Into LY.COM

Ctrip announced today that they made a $200 Million Investment into their competitor travel site LY.com becoming the second largest shareholder in the company. Ctrip is the biggest travel market platform in China. They offer everything from tours to bookings and the website is used by millions daily. The biggest shareholder is Tencent, who made a big investment into LY.com to strengthen their mobile flight booking system a while back.

The amount of equity obtained is undisclosed, but it is rumored to be at around 30%. Liang, the CEO of Ctrip commented that LY.com is one of the leading sites for sightseeing tours in China. With China’s economy growing and with more and more foreigners entering the country, LY.com’s sightseeing tours could be seeing a rise in profit. LY.com will be working closely with Ctrip’s system to provide the best tours for China.

Investing $200 Million into LY.com was not an easy decision for Ctrip. The company supposedly went into talks with other leading travel service companies as well, but Ctrip felt that LY.com will be their best option. Ctrip talked about how they expect to see a revenue growth by 6-8x in 2014. This will be due to the investments that the company will be making in the online travel service category.

It is estimated that domestic attractions received a combined more than 3 billion visits in 2013, with RMB 130 – 140 billion ($21-22 bn) in total revenue. But only 2% of the total tickets were sold online. The company also mentioned that this is not the only investment that they are looking at. The company have plans to become the biggest all around online travel marketplace in China.

In addition to investments, the company will also be looking into putting more money into expanding to smaller cities. A lot of smaller cities aren’t discovered by foreigners or outsiders yet. They have hopes to increase the visibility of these smaller cities as well as work with local people to set up tours in those cities.